Fixed deposits have been one of the most preferred investment options for decades and for a good reason. You set aside a lump sum from your hard-earned savings and watch it grow over a few years.
Other than helping you save money, fixed deposits are also extremely useful for funding some common big-ticket expenses. Read on to find out how.
How do fixed deposits benefit you?
One of the biggest reasons why FDs are popular is the safety they give you. Fixed deposit interest rates remain unaffected by market fluctuations or interest rate variations. You receive a fixed rate over the tenure of the FD and, thus, enjoy a risk-free investment with steady returns.
Moreover, fixed deposits offer higher interest rates than that of savings accounts. Depending on your chosen tenure, you can receive a handsome amount on maturity and use it to finance your expenditures.
Listed below are the top four ways you can use your FD to finance expenses.
1) Fulfilling long-term goals
Being financially secure is paramount for fulfilling your long-term goals, be it your wedding, education, health, or even purchasing your dream home. With a fixed deposit, you can ensure that you have the necessary funds for these expenses when the time comes. Due to the lock-in period, customers can’t withdraw money before maturity. Even if you do, you have to pay a penalty.
Thus, you can consistently build up your wealth over time, due in large part to attractive fixed deposit interest rates banks offer today. When you finally need the money, your FD can help you fund a milestone or important event in your life.
2) Securing urgent loans
Numerous Indian banks also provide loans against fixed deposits. In such circumstances, the bank will use your term deposit as collateral, against which it will issue a loan.
This is extremely helpful when you need funds for urgent expenditures but don’t want to liquidate your FD before its maturity.
3) Premature withdrawals
You can also use your fixed deposit to finance an emergency expense. If you do this before the FD matures, it is known as a premature withdrawal. You can liquidate your FD before it matures to withdraw funds immediately. However, the bank will charge you a penalty for this.
4) Post-retirement expenditures
When it comes to the elderly, their medication, hospital bills, day-to-day expenses, health insurances, etc., are a necessity.
Setting up a senior citizen FD is great for tackling these expenditures. Even more so, since several banks provide special fixed deposit interest rates for the aged. Therefore, you can have a sufficient corpus to fund your post-retirement years when you don’t have a steady source of income.
Most banks will allow you to redeem your FD either online or offline at a branch. Setting up a fixed deposit is one of the best ways to secure your financial future. Be it for emergencies, unplanned expenses, or funding your life goals, you can meet all your needs with your fixed deposit account.
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